The Consumer Protection Act and the hospitality industry

A recent tourism seminar held jointly by Cape Town Tourism and FEDHASA, highlighted some of the laws contained in the Consumer Protection Act that would have direct bearing on the hospitality industry.

While there are elements of the CPA that are still somewhat vague, precedence for these elements will no doubt be settled through consumer courts, which does leave businesses open to risk.

The onus is on businesses to ensure that they are as compliant as they can possibly be. There are many areas of the CPA that are quite clear, it’s important to be familiar with these and to implement them into your business practice – as well as by training your staff, who represent you.

Direct Marketing:
Individuals have the right to refuse unwanted direct marketing and can register for a pre-emptive block on direct marketing from specific suppliers. Direct Marketers will have to register annually with the Registrar of Companies, and will have to get written permission to approach each and every consumer. Direct Marketers may also not contact consumers on weekends or public holidays, as well as before and after certain times of week days e.g. evenings.

Cancelling Reservations or Bookings:
Although parameters are unclear at this point, product providers are expected to charge a reasonable deposit or cancellation charge, and must publish their deposit and cancellation policy in clear, easy to understand English. All guests must be made aware of the terms and conditions of the booking.

Disclosure of price of goods:
Full prices must be disclosed and hidden costs are not allowed. If a special only applies to a percentage of rooms in the hotel then this percentage must be disclosed.

Sales Records:
The law is specific on how quotes should be managed and invoices must include all company and cost details.

Marketing Standards:
Marketing efforts must be factual and accurate and may not mislead consumers in any way. This includes information put out by third parties engaged by the business.
Trade coupons, prizes and gifts vouchers must disclose all limitations and similarly any ‘bait marketing’ must announce the limitations of availability and validity.

Vouchers:
The terms and conditions of vouchers and coupons must be clearly stated. Vouchers must now be redeemable for a period of three years.

Quality Service:
This one is difficult to define but suggests that consumers are entitled to timeous, quality service.

Prepaid Services:
Service providers must protect any moneys of consumers paid 25 days in advance – this includes deposits paid for accommodation, flights etc…

Overselling/ Overbooking:
This one is particularly relevant to airlines and hotels that oversell rooms. In effect, failure to honour the transaction will now incur a full refund of the full amount paid but will also require that consumers are compensated for the transgression.

There is some leeway around this if service providers have taken steps to notify customers within a reasonable time frame or when a shortage of capacity is beyond their control.

Responsibility for Property:
Suppliers will be held accountable for consumers’ property while at the establishments or using their facilities.

Cooling Off Clause:
Although this is more generally directed at the sale of goods (particularly through telesales), there is a cooling off period for consumers of five days working days - so if they agree to a sale verbally or in writing they have every right to cancel within five working days of agreeing. This can affect verbal accommodation bookings.

Safety and Disclaimers:
Tourism service providers can now be held responsible if their products or environment causes harm, death or damage to any person or their property. In addition, companies can no longer issue a general disclaimer ...instead businesses must disclaim against specifics risk areas e.g. swimming pools, parking cars at your own risk etc

Business Compliance:
This clause is concerned with the registration of business names. It deals with the physical form, cost and manner in which a person who carries on any form of business must go about registering that business with the Registrar of Companies.